Employee owned firms are leading the way when it comes to ethics and management culture, with more democratic management cultures, high levels of employee motivation and a longer-term approach to business decisions.

That’s according to the findings of an interim research paper published today by the Chartered Management Institute (CMI) and MoralDNA™ to mark Employee Ownership Day. Supported by Fieldfisher and the eaga Trust, the paper features data from 829 employees across 14 employee-owned firms.

The survey found that 94% agree that being employee owned positively affects people’s commitment to the organisation, while 86% agreed it improves their ability to attract new staff. 90% said it improves overallperformance, while almost four in five (79%) said that it encourages longer-term decision-making.

Part of the reason may lie in differences in the organisations’ management and leadership culture. 90% of those surveyed said the prevailing management style is a high-performing democratic, visionary, coaching or affiliative style – compared to just 59% in non-employee owned organisations surveyed previously. Those in employee owned firms were twice as likely to say that management was democratic (31 to 15%).

Ann Francke, CMI Chief Executive, said:

“John Spedan Lewis described his famous retail company as an ‘experiment’ in employee ownership and called for others to set up their own. This research shows the success of such experiments. Employee ownership goes hand in hand with more democratic management styles and the benefits are clear, with high levels of employee commitment, more caring ethical mindsets and a more long-term approach to business decisions. The economy would benefit from having more employee owned companies and we can all learn from their example.”

The research is the first of its kind to focus on companies owned by employee trusts.

Graeme Nuttall OBE, Partner at law firm Fieldfisher and author of the Nuttall Review of Employee Ownership for the Government in 2012, said:

“Becoming employee owned doesn’t have to be complicated and it has become more attractive thanks to tax changes introduced in 2014. Existing research shows how employee ownership helps deliver better business performance and improved employee well-being. This ground-breaking CMI-MoralDNA research helps us understand why, through highlighting the positive impact of the democratic management styles typically found in employee owned companies.”

The interim findings also indicate that employees score markedly differently to those in non-employee owned organisations when it comes to their ethical preferences. They scored higher on the ethic of care than a comparison sample of almost 52,000 employees from other sectors, and lower on the rule-driven ethic of obedience.

“There are no significant differences in the ethical preferences of shop floor employees and senior managers. This strongly suggests that the cultures of employee owned companies are much less hierarchical and more collegiate than others.”

Richard Marr, Chief Operating Officer of the eaga Trust, commented:

“At the eaga Trust, we strongly believe that the working environment would be a better, happier and more successful place if there was significantly more employee engagement and ownership. It is great to see this vision being backed up by research such as this which will hopefully further promote the benefits of employee ownership.”